Malcolm Turnbull it set to convene an urgent meeting of gas company bosses to address what he's labelled an "energy crisis" following warnings of widespread national power shortages next year.
The Australian Energy Market Operator in a new report has warned of gas and electricity shortfalls if there was no new development to support more gas-powered electricity generation.
That's unless energy supply was boosted by increasing coal-fired generation and renewable energy output, combined with gas production and the possibility of LNG exporters redirecting a small portion of their production to the domestic market, the regulator said.
The prime minister says the revelations are "very concerning" and he'll be holding an urgent meeting of chief executives of east coast gas companies to find out how they plan to help their customers.
"We need to have a very serious discussion about how they're going to address this," he told a business summit in Sydney on Thursday.
Many changes were needed in the market to fix the issue, he added.
But the PM laid the blame squarely on the states, mainly Labor governments, saying they were blocking onshore gas resource exploration and development.
"We are facing an energy crisis in Australia because of these restrictions on gas."
Mr Turnbull cited past climate change modelling that had assumed a switch from coal to gas at vastly lower prices and greater availability than today.
"We are now facing a scarcity of gas driven by politics.
"On a continent filled with gas we are paying around three times for gas as another firm would in the United States."
Lock the Gate national co-ordinator Phil Laird said the meeting was a "slap in the face for farmers who are having their land and water ruined by big gas companies".
He said "siding" with gas companies over farmers was not the way to fix energy problems.
"Instead of holding an exclusive meeting with big gas companies, the prime minister should be meeting with farmers to discuss the damage this industry is doing, and with renewable energy companies, which hold the answer to our energy problems," he said.
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